Brazil Inflation Possibly Pushing Citizens to Buy Bitcoin (BTC)
Currency inflows into BTC purchases show a sudden spike in Brazilian real activity.
Bitcoin (BTC) is once again showing its mettle as a hedge against hyperinflation. After BTC became a safe haven for countries like Venezuela, Iran and Turkey, now Brazilian citizens may be attempting to store their wealth by buying BTC.
Data from the Coinlib service shows that the Brazilian real suddenly became the second largest source of liquidity for BTC, after Tether (USDT). In general, BTC fiat trading has thinned out in the past months, to be replaced by the leading stablecoin. In the meantime, the US dollar was the largest source of new fiat investments.
As of Tuesday, the Brazilian real carried inflows of the equivalent of $981 million into Bitcoin markets. In comparison, the inflow of USDT in BTC pairs is $1.4 billion.
Gathering exact data about the composition of BTC trading is impossible. CryptoCompare does not show BTC/BRL data. But Coinlib lists the Negocie Coins exchange, which may be the counterparty causing the spike in BTC/BRL trading. The exchange was also listed on CoinMarketCap, with volumes above $1 billion. However, CoinMarketCap does not count the exchange’s activity toward the general BTC trading volumes.
It is also possible that the newly arrived exchange is not achieving all of its volumes entirely organically. Bot activity and fake orders may mislead by implying robust direct purchasing interest.
In the past five years, the Brazilian real has lost about half its value against the dollar. The real traded at 25 cents, down from 27 cents in the past months, a significant change when it comes to fiat currencies. Additional political instability in the country may be adding to the interest in BTC. Activity on LocalBitcoins in Brazil also remains relatively high.
Brazil has experienced inflation in the past few decades - so it is possible the current inflow of BRL to be the direct result of the launch of a brand-new exchange. But just as BTC struggles to rally, a new injection of liquidity and trading activity may boost prices. The price of BTC in the BTC/BRL pair is higher, the equivalent of $5,477.23.